Accountants Begin To Heed Advice For Added Advisory Services

10. December 2017.








Accounting software that boosts automation isn’t taking jobs away from human accountants. But it is altering the profession, with more small businesses seeking advisory services from their accountants and bookkeepers.

Accountants are starting to pay attention to upcoming disruption too. Research released in October from BlackLine found more than three-quarters of accountants expect artificial intelligence (AI), for instance, to play a “significant role” in their field, with many anticipating AI’s ability to automate tasks, like accounts payable and accounts receivable.

This phenomenon has been seen in other areas of small business financial services, too: A report from Seed in October found small business owners are frustrated that their banks are not acting as advisors, with less than a third reporting that their current financial institution offers financial insight services, and only a quarter saying their institution provides business management advice.

These same demands are now weighing on the accountants that service small firms as well.

The latest data from small business accounting firm Xero suggests the accountants who are taking action on the call for advisory services are reaping the benefits. The firm published its annual national benchmarking report for the U.S. accounting industry last week, and accountants are reporting significant increases in revenue stemming directly from their advisory services.

In a statement reflecting on the report, Keri Gohman, president of Xero Americas, said the data indicates changes for the accounting industry.

“As accountants and bookkeepers move to the cloud and embrace new, more efficient, workflows in Xero, they don’t just add more capacity and services; they are advising businesses on a whole range of mission critical areas, from startup coaching to virtual CFO services and business app support,” Gohman said. “At Xero, it’s our mission to equip all accountants and bookkeepers in the U.S. with the ability to provide the coaching, support and insights businesses need.”

At the same time, the executive continued, many small businesses lack advisory services from their accountants — nearly a third don’t have accountants at all. In this week’s B2B Data Digest, PYMNTS highlights the key findings from Xero’s benchmarking report to find out how SMB accountants are reacting to demands for advisory services and evolving, disruptive technology.

—76 percent of accounting practices said they will be investing more resources to increase advisory services in the next year or two, Xero found. For the businesses that are already including advisory services in their offerings, practices report 69 percent more revenue generated per employee than practices that provide only accounting and bookkeeping services.

—20 percent of accounting practices say they aren’t sure if they’ll be investing in advisory services, while 4 percent don’t plan to invest in these services at all.

—61 percent of U.S. firms say revenues per client stemming from advisory services are $5,600. Those services include “budgeting and forecasting, virtual CFO services, business app support, startup mentoring, capital raising and business performance benchmarking,” according to Xero’s announcement of the report.

—68 percent of small businesses using Xero don’t have an accountant at all, and nearly half don’t have any type of advisor either. Xero emphasized the importance of advisory services, as SMBs that work with one “grow their net profit 23 percent faster” than those without advisory services, the company noted.

Overall, Xero found “very few” exceptions to accounting firms’ ability to grow revenue over the last year, especially as they migrate their services online. The growth, Xero concluded, can be traced back to “accountants and bookkeepers who are proficient with online accounting operating more efficiently and delivering a better client experience.”

According to Gohman, the data presents clear evidence that small firms should not only work with accountants (in addition to using accounting software), but should also be sure those accountants provide advisory services as well.

“Small businesses succeed when they work closely with advisors,” the executive stated. “In fact, small businesses on Xero who are connected to an advisor grow their net profit 23 percent faster than those who are not. Yet, we’ve found that only 32 percent of all small business owners have an accountant, and almost half of small businesses lack an advisor of any kind.”

“While only 50 percent of small businesses survive the first five years, the number significantly increases to 85 percent for Xero customers,” the executive continued. “When we compare their success rate against the nation’s average, it becomes crystal clear how important advisory is for the growth and longevity of small businesses.”

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